KALYAN JYOTI SENGUPTA,J. - (1.) BY this writ petition the petitioner has challenged two orders passed by the ITO, 'D' Ward, Company, District II, Calcutta, being the respondent No. 2 and the CIT, West Bengal (II), who have rejected the petitioner's application for obtaining consent to change the previous assessment year. The writ petitioner No. 1 is a company carrying on business of plantation and production and marketing of tea. The petitioner No. 2 is the principal officer of the petitioner No. 1. The petitioner No. 1 is an income-tax assessee and at all material times had and still has been maintaining its accounts from 1st April of each year upto 31st March of the next year, i.e., the previous year under s. 3(4) of the IT Act, 1961 (as it was prevailing at that time), applicable to the petitioner No. 1, assessee-company was from 1st April to 31st March.
(2.) BRIEFLY stated fact of this case is that in the year 1983-84 at the time of preparing and finalizing accounts of the petitioner-company it was ascertained that at the end of March substantial quantity of tea remained unsold and as such the said unsold tea had to be valued at estimated price for the purpose of accounting. It was thus realized that the inconvenience of fixing estimated price for unsold stock of tea could be avoided only by changing the accounting year ending from 31st March to 30th June, since by that time a good quantity of unsold stock of tea could be sold, and the assessee-company need not settle its accounts on the basis of imaginary and estimated price of its products. Considering the practical inconvenience and to remove the same permanently the management decided to change the previous year for the accounting purposes. Therefore, the petitioner-company after having adopted valid resolution dt. 29th March, 1985, filed an application dt. 17th June, 1985, before the respondent No. 2 for according consent to change the previous year as required under S. 3(4) of the IT Act, 1961. At that point of time the law was that assessee could change the previous year with the consent of the concerned ITO. However, no consent was accorded to the writ petitioner-assessee and as such the writ petitioner could not effect change of assessment year. Against the order of refusal to accord consent the writ petitioner filed an application for revision of the above order with the respondent No. 3 who, however, has rejected the application for revision and refused to accord permission and/or consent. Dr. Pal, learned senior advocate appearing in support of this application contends that though the power under S. 3(4) of the aforesaid Act conferred upon the ITO is discretionary one but this has to be exercised judicially. Upon true and proper interpretation of the said section it would emerge that according consent is a rule and refusal is an exception however, such consent can always be given on certain terms and conditions which may be imposed to protect the revenue. In this case, he contends, that the petitioner all the time was and still is willing to make good any loss of revenue and on the basis of this undertaking the consent should have been given. In fact, he has drawn my attention to the reason for refusal in giving consent by the respective authorities and submits that if the loss which might be suffered by the Revenue is made good, there cannot be any difficulty in giving consent. He has also drawn my attention to a Division Bench judgment of the Guwahati High Court which has held on identical facts and circumstances of a case that consent could be given if the assessee is willing to make good the loss. He further contends that by virtue of the interim order the assessment of the petitioner for all the pending years has not yet been done though his client has filed returns for the asst. yr. 1985-86 but the assessment has been stayed in view of the interim order.
(3.) MR . Ram Chandra Prasad, learned advocate, while opposing this application contends that according consent under S. 3(4) of the aforesaid Act is discretionary one and it cannot be claimed as a matter of right when the consent has been refused. It is not for the writ Court to examine justification in exercise of discretion in negative way nor reasonableness of reasons. He points out to the reasons given by both the authorities and contends that if the previous year is allowed to be changed then there will be no assessment for one year and the Revenue will be suffering loss to a great extent. As such this application is liable to be dismissed.;